Some land controllers must start drilling an offset well within 100 days when nearby production is draining the land, unless the horizontal-well exception applies.
Sec. 52.173. OFFSET WELLS. (a) In this section: (1) "Horizontal drainhole well" means a well with a horizontal drainhole that may produce oil or gas along at least 100 feet of the drainhole. (2) "Take point" means any point in a horizontal drainhole well where oil or gas can be produced from the reservoir or field interval recognized by the Railroad Commission of Texas. (3) "Unconventional fracture treated field" means an oil or gas field in which horizontal well development and hydraulic fracture treatment must be used to recover resources from all or part of the field. (a-1) Except as provided by Subsection (a-2), if oil or gas is produced in commercial quantities within 1,000 feet of land subject to this subchapter or if production of oil or gas is draining land subject to this subchapter, the owner, lessee, sublessee, receiver, or other agent in control of land subject to this subchapter shall in good faith begin the drilling of a well or wells upon such state land within 100 days after the draining well or wells or the well or wells completed within 1,000 feet of the state land commence to produce in commercial quantities and shall prosecute such drilling with diligence to reasonably develop the state land and to protect such state land against drainage. (a-2) If the well producing oil or gas in commercial quantities under Subsection (a-1) is a horizontal drainhole well located in an unconventional fracture treated field, the owner, lessee, sublessee, receiver, or other agent in control of land subject to this subchapter is not required to drill an offset well as provided by Subsection (a-1) unless any take point in the horizontal drainhole well is located closer to the state land than the greater of: (1) the minimum distance established by the applicable lease-line spacing requirement of the Railroad Commission of Texas; or (2) a perpendicular distance of 330 feet. (b) An offset well shall be drilled to a depth and the means shall be employed which may be necessary to prevent undue drainage of oil or gas from beneath the state land. (c) Within 30 days after an offset well has been completed or abandoned, a log of each well shall be filed in the land office. (d) At the determination of the commissioner and with the commissioner's written approval, the payment of a compensatory royalty shall satisfy the obligation to drill an offset well or wells required by Subsection (a-1). Such compensatory royalty shall be paid at a royalty rate established by the commissioner if the land is unleased, or at the royalty rate provided by the state lease, if the land is leased. Such compensatory royalty shall be paid on the market value at the well of production from the well producing oil or gas in commercial quantities described by Subsection (a-1). Acts 1977, 65th Leg., p. 2458, ch. 871, art. I, Sec. 1, eff. Sept. 1, 1977. Amended by Acts 1987, 70th Leg., ch. 948, Sec. 30, eff. Sept. 1, 1987. Amended by: Acts 2021, 87th Leg., R.S., Ch. 392 (S.B. 1258), Sec. 2, eff. September 1, 2021.